The ongoing US-Iran conflict has sent global jet fuel prices skyrocketing, delivering a severe financial hit to Australia’s largest air carrier Qantas that has forced the company to trim domestic flight capacity and put a planned $150 million share buyback on hold, the airline confirmed in its latest market update.
In the report released this week, Qantas detailed that its underlying annual profits have fallen 13.1% year-on-year to $2.06 billion, representing a $330 million drop from the same 12-month period last year. Statutory after-tax profits saw an even steeper decline, dropping 19.7% to $1.289 billion. The airline directly attributed much of this downturn to the market volatility triggered by the US-Iran conflict, noting that the conflict has pushed jet fuel prices to more than double their levels from February, adding more than $420 million in unplanned costs to the company’s balance sheet.
Qantas executives note that the final $610 million in total cost impacts would have been realized without swift intervention. To offset these rising expenses, the carrier has already implemented a series of adjustments, including raising passenger fares, reallocating aircraft to high-demand international routes, and cutting underperforming domestic capacity to match shifting travel demand.
Despite the major headwinds from fuel costs, the airline reported stronger-than-expected revenue growth across both its Qantas mainline and low-cost Jetstar brands, driven by resilient customer travel demand. Underlying earnings before interest and taxes rose to $1.44 billion in the reporting period, outperforming some analyst projections.
Qantas Chief Executive Vanessa Hudson framed the company’s current operating landscape as split between two vastly different economic environments: the stable, high-demand period before the outbreak of the US-Iran conflict, and the uncertain climate that has followed. “The final four months of the year saw business and consumer confidence fall as the conflict and broader economic headwinds created widespread uncertainty,” Hudson explained in the update. “Some large corporates and government agencies responded by managing their costs more tightly, which directly reduced demand for premium business travel.”
“In response to the surge in fuel prices, we quickly adjusted fares and capacity and redeployed aircraft to give customers more options to fly to Europe, where demand for leisure travel remains strong,” Hudson added.
In addition to capacity cuts, Qantas confirmed it is pausing the $150 million share buyback program first announced in April, as the company prioritizes preserving cash to buffer ongoing fuel price volatility. The airline’s board has approved a final dividend of 19.8 cents per share for shareholders, a payout that reflects the company’s continued effort to balance investor returns with cost stability amid global uncertainty.